Category Archives: Economic Science

Marxism, Capitalism And Their Politics, Explained

Why can’t government use its power to force equality?

What are some real problems with Marxism’s idealistic theories?

Does Capitalism really exploit the weak?

This video is a great short lesson in answering these questions:


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See also:

Bob And His Apples

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Filed under Economic Science, Economics, Government, Harsh Reality, Politics, Worldview

Economically, Putting Money In The Bank Is Like Spending It, Only Better.

How can saving money be the same as spending it?  What? Do you think the banker just hides your savings in a big vault until you want it back?  In a normal and healthy economy your money would be put to use doing things like building stuff, or digging and exploring for new resources, or all sorts of things like that. It would in fact be working just as if you had spent it. What you are putting in the bank, you see, represents value: which is your work.  But rather than consume the fruits of your labor right away, you forego that satisfaction and save.  This means that the currency that represents something of value, your labor, is used for other enterprises.  Those other enterprises involve profits, of which you get a little, (interest) the banker gets a little, (interest) and the one who borrowed it gets a little. (profit)

Don’t be an economic moron. Take the time to watch this short video to understand how we are all much better off with a true banking system, and not just a spigot with a money printer at the other end.

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Hat tip:  Austrian Economics Addict

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Filed under Banking, Economic Science, Economics, Money

The Price Of Utopia? You Can’t Afford It

When a person buys a loaf of bread he probably has no idea how the price of that bread came to be.  He notices when it is different from last week.  Some may have a vague idea that it is being impacted by inflation, whatever that is.  Yet prices, and how they are set, are central to economics.

While it wouldn’t make economic sense to drive around comparing bread prices to save 2 cents, it would make sense on something that saved, say, hundreds of dollars.  And, as one might suspect, people do generally drive around looking for the best deal on a new car. Consequently, the lowest priced dealership sells more cars.

We experience the same thing as sellers.  We must offer what we are selling for a competitive price or no one will buy it.  However, most don’t see themselves as sellers even though that is exactly what’s happening  when someone’s looking for a job.  He is offering to sell his back or brains.  That’s also why someone who can do brain surgery is able to sell his services for much more than someone who can cut your grass.  If brain surgery knowledge and skill were as easy to come by as lawn mowing knowledge and skill, why you could probably have that tumor removed for 30 bucks.

But what if a politician sets prices on bread, cars and brain surgery?  What would he set them at?  How would he be able to know the intricate and myriad details of availability, want, and how his price will affect both?  The answer is that he can’t.  But that won’t stop him from trying because he’s a politician, and as such he’s selling you something in his own right, which is a line.  It’s much easier to legislate the illusion of wealth than it is to create it, and sadly, man never tires of buying the line that such can be done.

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What Has Morality To Do With Economics?

The last half-century has been marked by a shift in the meaning of the word morality in Western Civilizations.  It has been slowly transitioning from an objective to a subjectively based word.  What is considered to be good and evil has increasingly become dependent on one’s on opinion and less on objective and absolute standards.  One may now feel justified in defaulting on a contract simply because, in his judgement, the other person or entity is rich and doesn’t really need the money.  This mindset, when predominate, does not foster a robust economy.

Consequently, this shift has increasingly hindered economic activity over time because economics is based on millions of transactions.  Contracts are signed.  Trust is placed in others.  It is agreed that if you do this then I will do that.  As trust erodes so does the ability for the life-blood of an economy, commerce, to happen freely.  Rather contracts are broken, defaults abound and lawyers celebrate.  In the end, the economy suffers, and so do the people.

Unfortunately for society, the drag that immorality places on commerce doesn’t stop with the individual participant.  The immorality of corruption leaches upward from an immoral society into the governing authorities.  This also impedes an economy as unreasonable demands are made on the participants in commerce by those authorities.  Resources are then squandered on excessive taxation, bribes, excessive regulation and delays.

This adds up to the siphoning of resources which would have otherwise led to higher standards of living for the population.  If you’ve ever wondered why the people of some nations struggle to eat while living their lives on ground that is abounding with resources, one need to look no further than endemic corruption.

So what does morality have to do with economics?  In a word, everything.

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Don’t Tread On My Private Property

In our current day of “social justice”, fair has come to mean an equal distribution of resources.  But there is a barrier to this goal.  That barrier is known as private property.

For years, being a moron myself, this term, “private property”,  was confusing.  I was raised in a rural area with plenty of “private property” signs around.  But this is not what private property is; at least not solely.  There are all kinds of private property… like money for example.  The fundamental component of “private property” is ownership.  One can say “that’s mine” with the weight of law backing it up.

But the misguided ideas that drive “social justice” muddies this concept.  One of the tasks of capitalist governments is to protect private property, which is why there are laws against theft.  But what if the government is enlisted by the majority to participate in theft from the minority?  If this can happen, is anyone’s property really private, or is it more a privilege dependent on the whim of the majority?

While the tension between ownership and social justice involves many facets, here is one: The emotion based appeal of equality versus the right to acquire and accumulate private property to do with as one pleases.

Most however don’t see this tension because most don’t have what is arbitrarily deemed to be more than their fair share.  There is no reasoned defense capable of answering this emotional argument, but there is sound economical reasons to defend private property. And, there are sound reasons to deny the authority in society to participate in theft.  To not do this is a slippery slope because once the right to private property is destroyed for one, the door is opened for it to be destroyed for all.

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Filed under Economic Science, Economics, Equality, fairness, Government, Morality, Worldview

How To Fleece The People With Maximum Efficiency

Government accomplishes more by tax rates than filling it’s coffers, which is kind of funny these days when you think about it because the government coffer is brimming over with I.O.U’s.

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Can’t We All Just Have A Utopian Style Economy?

Some time back I told a group of ten year olds that I had hidden a bag of candy.  I passed out maps that I assured them would lead to the treasure, but I purposely withheld the beginning point.  They began walking around, turning this way and that, counting their steps, as they each dutifully followed the map .  Not one of them asked for that key piece of information that would have unlocked it.  This surprised me for some reason.  In the end no one found the candy. So I ate it myself… In front of them.

There is a lesson here in economics.  Where one begins in the study of economics will determine where he ends up.

When most hear the word “economy” they think of the availability of jobs, money and so on.  But the starting point of economics is man, namely, answering the question, how will he act, good or not so great, under given circumstances?  With this answer in hand it then attempts to answer another question, how do we enlist our fellow man to participate in our own benefit?

While capitalism begins with the more negative view that man is only interested in himself, and from selfish motives will work, improvise, innovate, trade, think, risk, explore and other things that make for a good economy, communism is based on an assumption that man is more altruistic. It assumes he will do these same things with the same zeal in return for his fair share of resources, however much some wealthy, innately-benevolent leader decides that is.

That this hasn’t ever worked is a testament to the faultiness of communism’s premise.  That it will ever be attempted  is a testament to the validity of capitalism’s premise regarding man’s condition… well, that and his resilience to the truth regarding that sad condition.

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